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BMW of North America LLC v. United States

United States Court of Appeals, Federal Circuit

June 14, 2019

BMW OF NORTH AMERICA LLC, Plaintiff-Appellant
v.
UNITED STATES, TIMKEN COMPANY, Defendants-Appellees

          Sealed Opinion Issued: May 9, 2019

          Appeal from the United States Court of International Trade in No. 1:15-cv-00052-JCG, Judge Jennifer Choe-Groves.

          Kavita Mohan, Grunfeld, Desiderio, Lebowitz, Silver-man & Klestadt LLP, Washington, DC, argued for plaintiff-appellant. Also represented by Ned H. Marshak, Max Fred Schutzman, New York, NY.

          Tara K. Hogan, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by Claudia Burke, Jeanne Davidson, Joseph H. Hunt.

          Geert M. De Prest, Stewart & Stewart, Washington, DC, argued for defendant-appellee Timken Company. Also represented by William Alfred Fennell, Lane S. Hurewitz, Patrick John McDonough, Terence Patrick Stewart.

          Before Prost, Chief Judge, O'Malley and Stoll, Circuit Judges.

          OPINION

          STOLL CIRCUIT JUDGE

         BMW of North America LLC ("BMW") appeals the final judgment of the United States Court of International Trade, sustaining the United States Department of Commerce's application of an adverse facts available ("AFA") rate of 126.44% against BMW. We conclude that Commerce did not set forth its reasoning in sufficient detail to allow review of whether the selected AFA rate was unduly punitive. We therefore vacate the Court of International Trade's decision and remand for further proceedings consistent with this opinion.

         Background

         I

         Among its many duties, Commerce is charged with protecting domestic producers from foreign exporters' unfair trade practices. To this end, Commerce must investigate and impose antidumping duties on imported merchandise sold in the United States at less than fair value, causing material injury or threatening to cause material injury to an industry in the United States. See 19 U.S.C. § 1673. Generally, exporters of subject merchandise that have not been individually investigated during an antidumping duty investigation are subject to an "all-others rate" imposed in Commerce's final determination. Id. § 1673d(c)(1)(B). If an exporter or other interested party properly requests administrative review and is selected for individual examination, however, Commerce will reassess the antidumping duties applied to the exporter's subject merchandise using actual dumping margins for the period of review. See id. § 1675.

         With this brief background, we turn to the relevant facts in this case. On May 2, 2011, Commerce posted a notice in the Federal Register permitting interested parties to request an administrative review of antidumping duty orders on ball bearings and parts thereof from France, Germany, Italy, Japan, and the United Kingdom, for the period of May 1, 2010, through April 30, 2011. Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 76 Fed. Reg. 24, 460, 24, 460-61 (May 2, 2011). BMW timely requested administrative review of the antidumping duties on its imports of ball bearings and parts thereof from the United Kingdom.

         In the meantime, the antidumping duty orders on ball bearings and parts thereof from Japan and the United Kingdom, which were first imposed on May 15, 1989, were undergoing sunset review. To satisfy international treaty obligations, Commerce and the International Trade Commission ("ITC") must review antidumping duty orders every five years. See Understanding Five-Year (Sunset) Reviews, United States International Trade Commission (Jan. 11, 2019). To maintain an antidumping duty order, Commerce must determine every five years that revoking the order would be likely to lead to continuation or recurrence of dumping, and the ITC must determine that revoking the order would be likely to lead to the continuation or recurrence of material injury to an industry in the United States. Id. Here, both agencies made the requisite determinations, but the Court of International Trade vacated and remanded the ITC's determination several times between 2006 and 2011. The ITC eventually determined that revocation of the orders would not be likely to lead to the continuation or recurrence of material injury to a U.S. industry within a reasonably foreseeable time, and the Court of International Trade affirmed the ITC on April 20, 2011. The judgment was appealed to our court and stayed until July 6, 2011.

         On July 15, 2011, Commerce published a notice in the Federal Register stating that it was "revoking the antidumping duty orders on ball bearings and parts thereof from Japan and the United Kingdom." Ball Bearings and Parts Thereof from Japan and the United Kingdom: Revocation of Antidumping Duty Orders, 76 Fed. Reg. 41, 761, 41, 762 (July 15, 2011). The notice further indicated that, "[a]s a result of this revocation, the Department is discontinuing all unfinished administrative reviews immediately and will not initiate any new administrative reviews of the orders." Id. Commerce also noted that "the suspension of liquidation on all entries of ball bearings . . . will continue until there is a 'final and conclusive' court decision." Id. at 41, 763. On May 16, 2013, our court reversed the Court of International Trade, and on November 18, 2013, the Court of International Trade reinstated the ITC's affirmative material injury determination.

         On December 12, 2013, Commerce e-mailed counsel for all parties that had previously requested administrative review, stating only that it was "sending out a quantity-and-value-questionnaire to all respondents in the 5/1/2010-4/30/2011 administrative reviews of ball bearings and parts thereof from Japan and the United Kingdom." J.A. 134. The subject line of the email read "Ball Bearings from Japan and UK: AFBs 22 (2010-11) Quantity-and- Value Questionnaire." Id. On December 16, 2013, Commerce published a notice in the Federal Register, indicating that it was "hereby resuming the administrative reviews covering the period May 1, 2010 through April 30, 2011" and that the "deadline for withdrawing requests for review . . . will be 90 days after the date of publication of this notice." Ball Bearings and Parts Thereof from Japan and the United Kingdom: Notice of Reinstatement of Antidumping Duty Orders, Resumption of Administrative Reviews, and Advance Notification of Sunset Reviews, 78 Fed. Reg. 76, 104, 76, 105-06 (Dec. 16, 2013). Counsel for BMW did not fill out the quantity-and-value-question-naire, withdraw from administrative review, or otherwise respond to Commerce's communications.

         II

         During an administrative review, the "burden of creating an adequate record lies with interested parties and not with Commerce." Nan Ya Plastics Corp. v. U.S., 810 F.3d 1333, 1337 (Fed. Cir. 2016) (quoting QVD Food Co. v. United States, 658 F.3d 1318, 1324 (Fed. Cir. 2011)). This is because "the International Trade Administration, the relevant agency within Commerce, has no subpoena power." Id. at 1338. If a respondent fails to provide requested information by the deadlines for submission, "Commerce shall fill in the gaps with 'facts otherwise available.'" Nippon Steel Corp. v. U.S., 337 F.3d 1373, 1381 (Fed. Cir. 2003) (quoting 19 U.S.C. § 1677e(a) (2000)). Separately, if Commerce determines that an interested party has "failed to cooperate by not acting to the best of its ability to comply" with a request for information, it may use an adverse inference in selecting a rate from these facts. Id. (quoting 19 U.S.C. §1677e(b)). This is commonly known as the "AFA" rate.

         On September 17, 2014, Commerce released its preliminary decision memorandum. Decision Memorandum for Preliminary Results of Antidumping Duty Administrative Reviews; Ball Bearings and Parts Thereof from Japan and the United Kingdom; 2010-2011, A-412-801, ARP 10-11, at 3 (Sept. 17, 2014) ("Preliminary Decision Memo"). Commerce noted that BMW "did not respond to [Commerce's] request to provide information concerning the quantity and value of its U.S. sales." Id. at 6. Finding that BMW had "failed to cooperate by not acting to the best of its ability to comply with the Department's requests for information," Commerce applied AFA to determine BMW's weighted-average dumping margin. Id. at 1, 6. Commerce applied a 254.25% AFA rate, which "represent[ed] the highest rate calculated in the petition with respect to ball bearings" from the United Kingdom.[1] Id. at 7. Commerce explained that, "[w]hen a respondent is not cooperative, the Department has the discretion to presume that the highest prior dumping margin reflects the current weighted-average dumping margin." Id. Commerce reasoned that if the actual dumping margins were otherwise, the "party would produce current information showing its rate to be less." Id. Commerce found that the 254.25% rate was sufficiently probative of BMW's actual dumping margins, as it "falls within the range of individual dumping margins which we calculated for [the representative exporter] in the instant administrative review concerning ball bearings from the United Kingdom."[2] Id. at 8. In contrast, the other parties who had requested administrative review of the U.K. antidumping duty order received rates of 1.55%. Ball Bearings and Parts Thereof from Japan and the United Kingdom: Preliminary Results of Antidumping Duty Administrative Review; 2010-2011, 79 Fed. Reg. 56, 771, 56, 772 (Sept. 23, 2014). The "all-others" rate remained 54.27%.

         On October 23, 2014, BMW submitted a brief to Commerce, raising three main points: (1) the administrative review had been improperly reinstated; (2) the procedural anomalies, years-long delay, and changes in counsel meant BMW was entirely unaware it even had an administrative review pending; and (3) the AFA rate assigned to BMW was excessive and unreasonable. In its final results and accompanying decision memorandum, Commerce responded that, while this was indeed the first time it had automatically reinstated an administrative review following appellate court review, it nevertheless had the discretion to do so. Further, because BMW did not respond to the quantity-and-value questionnaire, it did not cooperate, and thus application of an AFA rate was proper. Finally, Commerce explained that the AFA rate was not excessive and unreasonable, as it is Commerce's "normal practice in an administrative review to select as AFA the highest rate on the record of the proceeding that can be corroborated." Issues and Decision Memorandum for the Antidumping Duty Administrative Review of Ball Bearings and Parts Thereof from the United Kingdom; 2010-2011, A-412-801, ARP 10-11, at 14 (Jan. 21, 2015). According to Commerce, because "a cooperative respondent, NSK, had transaction-specific dumping margins in excess of 254.25 percent," the "petition margin is a reasonable rate incorporating an adverse inference for a company that did not respond to our request for information." Id. at 15.

         BMW filed a complaint in the Court of International Trade. The Court of International Trade held that Commerce had the authority to resume the discontinued review without having to initiate a new review. BMW of N. Am. LLC v. United States, 208 F.Supp.3d 1388, 1393-94 (Ct. Int'l Trade 2017). The Court of International Trade also concluded that Commerce's use of AFA was supported by substantial evidence. The court identified the fact that "every other respondent in this review responded to the [quantity-and-value] questionnaire," coupled with BMW's "failure to monitor the status of the litigation that led to the revocation of the very order that [BMW] requested to be reviewed" as substantial evidence supporting "Commerce's conclusion that Plaintiff failed to act to the best of its ability." Id. at 1395.

         The Court of International Trade found that the AFA rate of 254.25%, however, was not corroborated or supported by substantial evidence. Id. at 1398. The court noted that "the purpose of AFA is to 'provide respondents with an incentive to cooperate, not to impose punitive, aberrational, or uncorroborated margins.'" Id. at 1396. The court further noted that while the petition Commerce relied on "alleged dumping at 254.25 percent, the two individually investigated parties received rates of 61.14 percent and 44.02 percent, respectively, while the all others rate was calculated at 54.27 percent." Id. at 1397. The court rejected Commerce's attempt to corroborate this rate based on the representative exporter's "transaction-specific dumping margins in excess of 254.25 percent," reasoning that these margins represented [redacted] of the representative exporter's total transactions, and were thus aberrational. Id.

         On remand, Commerce applied an AFA rate of 126.44%, which it explained was:

the highest transaction-specific dumping margin that forms part of a closely-connected range of transaction-specific margins (i.e., it falls on a [redacted] of transaction-specific dumping margins in the sense that [redacted]).

Results of Remand Determination, A-412-801, ARP 10-11, at 6 (May 11, 2017) ("Remand Determination"). Commerce found "no circumstances indicating that the selected rate is aberrational or otherwise not appropriate as AFA" as the quantity, price, and circumstances surrounding the transactions were not unusual. Id. at 6-7. As to BMW's argument that the rate was "punitive" and inconsistent with BMW's "level of culpability," Commerce responded that "it appears that BMW is actually seeking to relitigate the Department's determination to apply facts available with an adverse inference in the first instance." Id. at 16. Commerce further noted that a "respondent who has not cooperated in a review should not benefit from its non-cooperation." Id. at 17. Continuing, Commerce explained that "[a]ssigning to BMW a rate that is higher than ...


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